Are there "real" benefits in working with 16 bit images?

You need to visit Andrew Rodney's site, digitaldog.net/, to find examples to demonstrate the possible advantages to working with high bit images.

You have stated three very significant things:
1 - You want 'real' benefit
2 - You do see sometimes 'banding' in your histograms, not in you prints
3 - You say that Elements has very limited 16 bits support.

I can't find any better source than Andrew Rodney to explain the 8 to 16 bits topic. What I can say is that he does not discuss the 'Elements' side of the problem, so you have to go farther than his explanations to judge by yourself.

I have spent a lot of time to read what other 'experts' say about this, and to discuss the problem with many Elements users.

You wrote:
"I will continue to do as much of the tonal adjustments as possible in 16 bit mode while the RAW image is in ACR but I have to convert it to 8 bit when moved from ACR to PSE since all the main tools in PSE (Adjustment layers etc) are disabled for 16 bit images."
Yes, that is the best workflow (there is a total agreement from all experts)
No, the main tools are not disabled (are layers and local adjustments the main tools? That's the common illusion. The main tool is the ACR module.

Let's see why.
You are working with raw files which need the ACR module. You also work with jpeg at times; those are 8-bits only, but they can be edited in ACR too (in 16-bits).
You can consider the importance of  16 bits editing by concentrating on the risk of visible posterization in your prints. The other advantages shown by Andrew Rodney become visible not on tones, but in the accuracy of color, especially when working on wide gamut color spaces. We can discuss this in other posts, but 99% of the problems for Elements users are about posterization.

Posterization or banding.
Banding occurs as a result of stretching the tones on soft gradient areas like skies or backdrops while editing (you don't see it on native raws or jpegs).
Everybody agrees that working in 16-bits precision is the main cure. (As a matter of fact, there are frequent discussions where 16-bits is not enough, and you have to add noise to hide the problem). That's what the ACR module does very well, better still than the 16-bits tonal adjustments available in Elements. That's also because the internal raw processing is made in a wide gamut color space which requires more precision. For jpegs handled in ACR there is a theoretical advantage as well, even if they start from 8-bits.

Banding becomes visible in soft gradients
To be able to see the 'scales' of banding you have to be in relatively wide areas. That's not going to happen for details like sharpening or dust removal. That's easily found in monochrome pictures (B & W has 255 values only...) So, the fact that local adjustments are not available in 16-bits in Elements editor is not relevant.

Histograms:
They can display the risk of banding before you can really see it on screen or prints. Warning: you may see banding on your display which is created by your display setup; the histogram is useful there as well as a test print. My suggestion is to play a lot with the histogram while creating posterization on test image: you use the filter 'Posterize' to judge the real effect and the histogram look of images with 128, 64 ,32  tones...

Dangerous edits creating posterization:
Any global adjustment may yield posterization: levels, contrast, curves. One of my favorites for tests is 'equalize'. All tonal adjustments may be done in ACR and they are available as well in the 16-bits mode of the editor, including filters like equalize, posterize, gradient maps. Play and compare 8 and 16-bits versions both visually and the histogram.

Layers.
The danger is in stretching. Let's say you want to show the differences in two layers with different edits. The difference mode yields a very, very flat result. You increase the contrast hugely by curves, levels, gradient maps: you'll immediately see the banding as well as the jpeg artifacts.
If you use the normal blend mode, there is NO stretching. Beware only of stretching blend modes. No danger for compositing or scrapbooking. No, Elements does not miss anything by not providing layers in 16-bits mode.

I'll summarize:
- You work first in ACR to solve all global tonal adjustments
- you can also work in 16-bits mode in the editor for those adjustments, but that's redundant in 99% of the situations.
- You don't need 16-bits for local adjustments
- correctly edited tones in ACR don't require some dangerous layer blend modes, you can always use layers without creating posterization.
- If you still get posterization in 16-bits, consider adding a tad of noise.
- Don't forget that typical Elements users do use 8-bits home or print service printers as well as 8-bits displays. I challenge you to show visually the difference of a 16-bits image and the same converted to 8 bits.






 

That brings another interesting question about 'local' adjustments (not available in Elements ACR).
- we have seen that 'detail' adjustment for sharpening or dust can't produce visible posterization (tiny areas)
- Since you need wide areas to see banding, the effect of clarity or large radius USM (available in 16 bits mode) can't be seen either. Important to give global 'depth'.
- What's left, as you rightly point out, is the effect of tone stretching in significant parts of the image like skies. You can use two kinds of tools. Levels, curves, gradient map or similar adjustments or you can use the 'paint with light' technique based on painting on a high pass overlay/soft light layer.
I leave it to you to search why the 'paint with light' technique does not add banding...
For larger areas like skies with level kind adjustments, if the histogram shows a possibility of banding, you can work on different layers obtained from ACR and use masks. The normal blend mode with masks does not entail any tone stretching. The 'open in ACR' and 'Raw corrections' of Elements+ do help you to make the process easier. In other words, compositing non posterized layers in 8-bits with masks in normal mode can't create posterization.